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Deutsche Bahn faces rising competition on home tracks

Locomore, a small company backed by British and US investors, is planning to compete with Deutsche Bahn on the busy route between Hamburg and Cologne next year. Low fares and three trips daily each way are planned.

The next stop for the Deutsche Bahn is private-sector competition

After missing its initial start date in August, Berlin-based rail provider Locomore now says its first privately-operated express train will travel its planned route between Hamburg and Cologne in April 2011.

The company, which is backed by American and British investors, hopes to benefit from railroad deregulation in Germany by undercutting the fares of the Deutsche Bahn (DB). However, it has struggled to secure space on the rail network, which DB controls.

Locomore head Derek Ladewig told the Sueddeutsche Zeitung Thursday that the company has now secured contracts to operate its services on the route through December 2015. It will renovate older trains and offer three trips each day in both directions.

“We're very happy, that everything is working this time,” Ladewig said. “We will be very affordable and very comfortable.”

Only one other private long-distance route exists in Germany today. A subsidiary of the French company Veolia operates the “Interconnex” service between Leipzig, Berlin and Rostock.

A spokesman for the Deutsche Bahn said the company isn't concerned by the newcomers.

“We've had competition in regional transport for many, many years now and are very accustomed to it,” he told Deutsche Welle. “Our long-distance service is an independent transportation service offered by the DB. So far we've been able to keep our customers and we're relying on that continuing to be the case.”

In recent years, DB has aggressively been expanding into foreign markets. It has signed multi-billion deals with the United Arab Emirates and Qatar, and bought British train and bus operator Arriva.

In a sign the company may be reacting to ongoing deregulation in its home market, DB announced Wednesday it will significantly restructure its passenger service by January 2011. Among other changes, it will combine its rail and bus services.

With long-distance bus services – previously only permitted in exceptional circumstances – set to enjoy deregulation by the end of 2011, DB will soon face an entirely new type of competition.

Start up can succeed

Barbara Mauersberg, of the Berlin-based Pro-Rail Alliance, said she's concerned that long-distance buses could undermine the quality of Germany's train service. For one, bus operators will be able to offer more flexible schedules. But when it comes to competitions on the rails, she's all for it.

“It can work, and it doesn't necessarily have to be a bad thing,” she told Deutsche Welle. “That's the way it has to be in a free market… there's an opportunity. And that opportunity needs to exist in rail service.”

Interconnex was Deutsche Bahn's first long-distance competition

Even if competition on long-distance routes hurts DB's revenue stream, local routes in rural areas would not be neglected to compensate, according to Mauersberg.

“In the end, it's the political establishment that decides how many trains to make available to citizens,” she said, adding that private rail companies are now often recruited to fill gaps in local service.

Mauersberg said she's optimistic that Locomore can succeed. “But of course when there's an ex-monopolist in play that is so well established in the market, then a small start-up doesn't have an easy path,” she said.

Representatives of Locomore were not available for an interview Friday.